Make data pay: Track variable rate cost per bushel

Think different
Growers are sometimes reluctant to invest extra dollars to increase their yield potential in the best parts of the field — “especially with lower grain prices,” says Dan Frick, president of Frick Services, Wawaka, Ind. In a recent planning meeting with a grower, for example, “the grower started the meeting by saying he wanted to cut his fertilizer cost by $25 per acre,” Frick says. After digging into the data, “we were able to turn him around to think about cost per bushel, not total dollars spent,” Frick says. The data analysis showed that “his lowest cost per bushel last year was in areas where he used higher rates of P and K, and higher seeding rates.” That gave the grower confidence to invest more money in areas with high return potential, Frick says.

Integrating financial data and geo-referenced field data is the most sophisticated level of precision ag management, says Dan Frieberg, president of Premier Crop Systems, West Des Moines, Iowa, a precision agriculture software company. “There’s a lot to it and it requires a very high level of trust between the grower and consultant.”

Premier Crop Systems’ precision software captures direct input costs for every 60 by 60-foot square of the field. The software also allocates indirect expenses by bushel, including insurance, equipment and land costs. “I’d like more growers to do this,” says Dan Frick, president of Frick Services, a fertilizer, grain and agronomy services company in Wawaka, Ind. The insights can be surprising, he says.

Turn data into knowledge

About half of Frick’s customers track production costs by field and by bushel, he says. Site specific cost analysis reveals which parts of a field are most profitable and least profitable. “It’s a great learning tool,” he says.

Sometimes, growers are surprised by what the cost analysis shows. For example, Frick says, producers usually focus on total dollars spent per acre. They assume that their highest costs per bushel are on those acres “where we recommend that they apply higher amounts of fertilizer or increase planting rates. When we get them to look at cost per bushel, their thinking begins to change.” They recognize that in areas where the soil will support potential yield increases, “more total dollars spent usually leads to lower cost per-bushel.”

Make data pay

Cost analysis confirms the value of aggressive input management in highly productive zones, Frick says. “This is very much about finding the right variable rates.”

The same analysis can also be used “to seek areas of the field that are not producing as they should, and then search for answers. We raise questions about what changes we could make to lower the cost of production.” For instance, “Maybe there are drainage problems.” Understanding your cost per bushel can help you decide how much capital investment in drainage would be justified, Frick says.

This type of data analysis is also useful for marketing, giving growers a clear grasp of their break-even price, he says. It’s helpful for making cash rent decisions, too. “Growers use this to assess how aggressive they can be” on contract bids. “We’ve also had growers let rented fields go on this basis.”